Colombian-based cross-border remittance start-up Valiu has launched Bitcoin-backed synthetic U.S. dollars as a means for Venezuelans to access stable assets and bypass the hyperinflation plaguing their national economy.

It’s still in Alpha, but Valiu has partnered with Latin America food delivery app Rappi, which could offer a large user base to help with adoption when it’s rolled out in full later this year. 

Synthetic USD

On April 23, Valiu chief executive Simon Chamorro tweeted that the firm’s ‘cryptodollar’ has launched in alpha:

“After 4 months of 80+ hour work weeks, 500k+ lines of clean code written across 4 engineers, shifting the company fully remote due to COVID, and completing a rigorous regulatory analysis … I’m proud to say that Valiu’s cryptodollar is now live and running in Alpha.”

Valiu’s synthetic dollars are stored in a smartphone wallet app, and can be sent among Venezuelan users without fees. The synthetic dollars are backed by Bitcoin, however, users without cryptocurrency knowledge can simply buy and transfer cryptodollars by depositing cash at one of Valiu’s thousands of remittance partners in Colombia.

Sid Ramesh, an advisor to early-stage startups, posted a video detailing the app’s operation, with Chomarro sending him one cryptodollar from his smartphone in less than 30 seconds.

‘Cryptodollars’ as a solution to hyperinflation

Valiu CEO has described a recent influx of migrant workers from Venezuela coming into Colombia as the inspiration for the cryptodollar project, as many had been using a risky black market for remittances that developed as a result of Western Union and MoneyGram becoming increasingly subject to capital controls.

Valiu has been providing fiat currency-based remittances to Venezuelans for seven months but hyperinflation meant recipients ended up with less bolivars during the time it took to arrive. 

“99% of remittances still arrive in bolivars,” Valiu’s head of research Alejandro Machado tweeted earlier this month. “Dollars cash hardly make it across borders, especially in the middle of #COVIDー19 lockdowns.”